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State moving toward health-care reforms

By Matt Murphy, State House News Service

Updated:
12/19/2012 09:37:06 AM EST

BOSTON -- The state plans to begin shifting Medicaid patients by June, as required under a new health-care cost-containment law, into new alternative plans that will pay doctors based on a patient's overall care rather than the number of services provided, and offer rewards for good health.

The so-called Primary Care Payment Reform initiative being launched by MassHealth will pay primary-care physicians a risk-adjusted fee for each patient and allow doctors to receive incentives for quality performance and share in savings achieved through reduced hospital stays or specialist services.

The program has been designed to align with the goal set forth in the state's new health-care payment reform experiment that calls for 25 percent of all MassHealth patients to be enrolled in alternative payment plans by July. That benchmark grows to 50 percent by July 2014 and 80 percent by July 2018.

"It will be important to have a learning collaborative strategy," said Dr. Julian Harris, director of the Office of Medicaid. Harris presented the plans on Tuesday to the Health Policy Commission.

MassHealth has 1.3 million members and a budget of $11 billion in fiscal 2013.

Overall, 37 percent of MassHealth patients are enrolled in one of five managed care organizations that contract with the state, while 28 percent are in fee-for-service primary-clinician plans. MassHealth plans to release a request for response to providers in January with applications due in March from providers in PCC plans who wish to participate in the new primary-care payment plan.

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The state is also working with managed-care organizations to allow providers to be paid based on a similar framework.

The Health Policy Commission met for the second time Tuesday after being created under the 2012 health-care reform law, beginning to delve into myriad issues tasked to the commission, as well as working through some oversights in law that have left the commission without funding, among other conflicts.

The board voted unanimously to accept the recommendation of a subcommittee that David Seltz be hired as the commission's executive director. Seltz, a former top policy aide to Senate President Therese Murray who has been working with the Patrick administration to implement the new health-care law, emerged from a field of 16 "qualified applicants."

The subcommittee, led by commission Chairman Dr. Stuart Altman, narrowed the field to four finalists and interviewed three candidates after one backed out.

"I've talked to many of you out in the audience that represent various constituent groups and without exception what I got back was extremely positive. That during this complicated sometimes contentious environment leading up to the passage of the law, David was above board, open, took comments from everyone, responded, and that left me with a very positive feeling that he would represent us well," Altman said.

Wendy Everett, president of the New England Healthcare Institute, was also voted vice chair of the commission, and Altman divided the commission members into four subcommittees devoted to cost trends and market performance; quality improvement and patient protection; care delivery and payment system reform; and community health care investment and consumer involvement.

Rep. Steven Walsh, a Lynn Democrat who helped write the House cost-containment bill and negotiate a compromise with the Senate, applauded the selection of Seltz.

"David's wealth of health-care knowledge and his ability to work with people make him the perfect choice for such a daunting challenge. I look forward to continuing to work with David to make our vision for health-care reform a reality," said Walsh, co-chair of the Health Care Financing Committee.

Seltz said successfully reducing health-care costs without jeopardizing quality or access to care is "one of the greatest challenges of our lifetime" and pledged to be "impartial, transparent, honest and fair in all of my dealings."

Despite pushing for senior fellow Amy Litschko, a former Romney health-care adviser, to get the job, the Pioneer Institute said it looked forward to working with Seltz. Litschko was one of three finalists who interviewed for the position along with Tom O'Brien, assistant attorney general and chief of the health-care division in Attorney General Martha Coakley's office.

"Given the outsized regulatory powers granted to the position, we urged state leaders to select an individual with the common sense and impartiality that come with broad market experience. David is young, smart, and a quick study. We hope he'll focus on innovations in the market rather than expanding the status quo, top-down approach to health care policy," said Josh Archambault, director of health-care policy for Pioneer.

Altman said Seltz's salary was still under negotiation, but would be commensurate with what others in state government earn in comparable positions, which another State House source said would be in the low $100,000 range.

With Seltz's hiring finalized, Altman said, "We need to start hiring people because some of the responsibility comes on top of us quite quickly." The only problem is that the law approved by the Legislature and signed by Gov. Deval Patrick in August envisioned the commission taking a slice of the $225 million in assessments to be levied on providers and payers to cover its expenses.

Since the first surcharge payments are not scheduled to be made to the state until June 30, board members and Seltz said the commission may need to seek legislative approval to spend against anticipated revenue from surcharge.

Under the cost-containment law, the commission is required by the end of the year to develop regulations on how assessments on acute care providers and qualifying payers will be charged and how those fees will be collected. Though the law is fairly specific on the size and distribution of the $225 million surcharge, some clarifications need to be made through regulation, Seltz said.

Insurance plans will pay a total of $165 million in surcharges, while certain acute care providers will be on the hook for $60 million, expected to impact mostly Partners HealthCare, Beth Israel Deaconess Medical Center, and Boston Children's Hospital. The fees can be paid over four years, and providers can request waivers or mitigation from some of their responsibility. The money will be divided between a health-care payment-reform fund, a prevention and wellness trust fund, the e-health Institute and the distressed hospital fund.

Given the time of year, the board agreed to ask Seltz to issue draft surcharge calculations and guidance on regulations that will be formally presented in January and subjected to a public comment process. The guidelines, Seltz said, should be helpful to hospitals and insurers to plan for surcharge and keep to the spirit of the law, even though the regulations could be delayed by a couple of months.

Candace Reddy, an analyst with the Executive Office of Administration and Finance, filled in for outgoing Secretary Jay Gonzalez at the meeting, and briefed the commission on the process being used for the first time, in conjunction with the setting of a consensus fiscal 2014 revenue figure, to determine a potential gross state product-growth benchmark.

Set at 3.6 percent in 2013 and subject to commission approval in future years, the growth figure will be used to enforce the cap imposed by the cost-containment law on overall medical spending growth from year to year.

Secretary of Health and Human Services JudyAnn Bigby advised the commission that despite the growth cap, the goal of the law was to limit state spending on health care, and the benchmark should be viewed as an average. Bigby said some segments of the health care industry that have been underfunded for decades may need to grow faster than the target, forcing others to limit their growth below the benchmark. Seltz acknowledged after the meeting that such a view of the law could create issues with enforcement and knowing who to hold accountable for missing the target if some providers are allowed to grow at a higher rate.

Harris said the new Primary Care Payment Reform Initiative will incorporate lessons learned from the state's Patient Centered Medical Home pilot program, and will improve the patient experience by giving physicians the flexibility to offer phone and email consultations without worrying about billing codes.

The program, according to Harris, will provide financial incentives to integrate and coordinate behavioral health care alongside primary care, and allow a range of primary-care practice types and sizes to participate with three different tracks for providers with ranges of experience managing risk.

The initiative will be supported financially with funding from a variety of sources, including $628 million from the MassHealth Delivery System Transformation Initiative, the Distressed Hospital Fund and enhanced Medicaid payments for primary care providers through the federal Affordable Care Act.

Harris said the full cost of building up an infrastructure around the providers who participate through the Primary Clinician Plans remains to be determined, prompting calls from some stakeholders to consider shifting all Medicaid patients instead into Managed Care Organizations that have experience supporting similar methods of care delivery.

"We think the MCOs have the infrastructure and expertise to move this initiative forward," said Lora Pellegrini, president of the Massachusetts Association of Health Plans representing the five MCOs.

Doctors and provider groups selected to participate in the PCPR initiative will be announced in April, and the payment reform program is scheduled to go live in July.

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